When you’ve written and re-written a story, you’re too close to it to judge it critically. So you give it to your spouse, parent or neighbor to read.
It doesn't usually work. First, because of your relationship, people close to you are apt to love whatever you write simply because you are the one who wrote it. Second, they usually aren’t writers. They can’t tell that a character is underdeveloped, that the dialogue is stiff, or that the middle of the story sags. And third, if they do have valid comments, they may be hesitant to say what they really think for fear of hurting your feelings.
A critique group fills this gap. Whether the group is made up of beginning writers growing together, or experienced writers willing to mentor a beginner or two, your work is being read by people who have some idea of what it takes to write a good story. They have a fresh outlook on what works and what doesn’t. They can give constructive comments on characterization, dialogue, plot resolution, description, etc. Group members may point out that the voice doesn’t ring true. Or that the dialogue tags aren’t needed. Or that the passage you've worked over and over actually slows the pace and needs to be cut completely. They can also help you figure out where you really want the story to go.
In addition to the fiction nuances, critique group members are great at being the extra sets of eyes to find typos, grammatical errors and the leftovers from changes. When you’ve done a global search-and-replace, they’ll notice the one instance you missed switching the character’s name from Laura to Sophia. They’ll catch the logistical errors, such as seeing the villain slip through the crowd when you had left him bed-ridden in the last chapter. They’ll find the subject-verb agreement problems, the pronoun antecedents, and the places you wrote “Brian” instead of “Bryan.”
In return, you'll provide critiques for other members. It's not only payback for their critiques, it is a valuable learning tool. As you read, you’ll look for places that sound stiff, places where the dialogue doesn’t fit the character, places where you’d like to see more of one thing or another. You’ll also look for phrases that sing, for good use of description or action within dialogue, for a place where a character really shines. And as you notice and mark those spots, you’ll get better and better at seeing them in your own work. As you discuss the story within the group, you’ll learn to pick out what the other members noticed.
When giving feedback, it’s a good idea to use the “Oreo principle.” Begin with something positive, then mention the problems, then end with something else positive. It takes a while to develop a thick skin, and sandwiching the problems between the good parts can soften the impact.
When it’s your story’s turn, there may be criticisms that you don’t agree with. Remember that your job is to listen. Don’t argue or explain, just listen. Then go home, think about what they said or wrote, and decide which changes to make and which to throw away. After all, even with a critique group, it’s your story.
Read more on finding a critique group, or forming your own.